I am dealing with an estate wherein the deceased died with domicile in Lebanon. His UK estate comprises of a rental property, and UK bank account. As he died leaving a wife and child, I am trying to determine how rental income during the administration period would be treated for succession purposes, i.e. would the income be treated as immoveable property as it derives from a property interest or moveable property as it is cash. This would greatly affect how the property is distributed, and whether it would fall within the statutory legacy or under the inheritance laws of the deceased’s domicile.
For a foreign domicile the bank account and the house cannot be described as in the UK - it must be specified as in England and Wales, or Northern Ireland or Scotland.
The property itself is located in England, this includes the rental property and the bank account.
If probate is applied for in England or Wales, and here the deceased apparently died intestate, English law as the lex fori will govern the administration of the estate, including its private international law (PIL).
English PIL initially has to make a determination of whether a particular asset of the estate is immovable or movable. Only as a secondary determination is it then required to decide how it should devolve beneficially, which may engage differences enjoined by the governing law e.g. whether realty or personalty (an idiosyncracy of English law, nowadays less marked).
Income, and profit, are not property in English law which is vanishingly unlikely to recognise their existence as an asset let alone classification or location. Rent accruing does not become property until it becomes due and payable. At that point it becomes a debt, for as long as it remains unpaid. Once paid, it becomes cash, the creditor’s rights in a bank account, or ownership of a documentary (possibly negotiable) instrument, or other asset into which it is invested.
It is therefore possible that the status of rent payable but unpaid at the date of death is considerably temporary because once paid it is transposed into a different asset.
You might consider it obvious that a debt is movable. But Re Hoyles [1911] 1 Ch 179 held that the rights of a mortgagee of English land is an immovable, despite the debt being personalty. A rentcharge over English land is an immovable. I suggest that unpaid rent is a debt and so a movable of the estate of the creditor/assignee.
There is the rather curious case of Re Cutliffe’s WT (1940). It was decided by Re Berchtold in 1779 that land held on trust for sale was an immovable until sold although the proceeds of sale would have been a movable. In Cutliffe the land had already been sold and the proceeds invested in a debenture of an English company. The Court decided that the debenture was an immovable because the land was “settled land” and the English statute deeming capital money to be land for all purposes was paramount.
The location of the debt as an intangible movable is usually where the debtor resides, with any factual doubt over that to be ultimately for a court if not agreed. As I say this issue may be highly transient as it is only relevant to a debt unpaid at the date of death. Rent becoming due and payable after the date of death is surely going to devolve on whoever is entitled to the immovable (freehold or lease) which confers the right to the rent as an incident of the ownership of that asset, as determined by the lex situs, English Law.
Jack Harper
I agree entirely with Jack Harper. If the “rental property” is not sold at the date of death, it must be treated as being immovable and therefore subject to English laws of inheritance and taxed accordingly.
Peter Double / Probate Resealing Services.